Measure short-term operating liquidity from current balances
Working capital compares current assets with current liabilities at a point in time. It provides a simple view of the resources available to meet near-term obligations and support day-to-day operations.
Formula
Worked example
A business with $180,000 of current assets and $120,000 of current liabilities has $60,000 of net working capital and a current ratio of 1.5.
Positive working capital is not the same as available cash
Current assets can include inventory and receivables that take time to convert into cash. Current liabilities may become due before customers pay or inventory sells.
Review aging, inventory quality, seasonality, payment terms, and restricted cash. A business can report positive working capital and still experience a cash shortage.
Interpret the result in context
An appropriate level varies by industry and operating model. Subscription and fast-cash businesses can function differently from inventory-heavy or project-based businesses.
Track the trend and working-capital cycle rather than relying on one date. Rapid growth can consume cash when inventory and receivables rise before supplier payments are due.
Working-capital review
- Use balances from the same reporting date.
- Check receivable aging and inventory quality.
- Identify liabilities due before expected cash receipts.
- Compare the trend with operating cash flow and growth.
Last reviewed September 8, 2026. This calculator provides an estimate for planning and education. Verify current rates, rules, and account-specific terms with the relevant official source.